Nissan to supply cars to Chrysler for sale in South America

TOKYO -- Nissan and Chrysler have reached a deal to have Nissan supply cars to Chrysler for sale in South America starting next year, the automakers said today.

The model, based on the Nissan Versa sedan, will be supplied under what is called an OEM, or "original equipment manufacture," agreement in the auto industry.

That means Japanese automaker Nissan Motor Co. will supply the cars, which are also sold as Nissan models, to Chrysler LLC so the U.S. automaker can sell them under its own brand.

Such OEM agreements are fairly common among automakers and should not be confused with major alliances like the one Nissan has with Renault SA of France. But they can help cut costs and strengthen product offerings immediately.

Detailed terms of the agreement were not disclosed.

"This kind of tactical partnership allows us to maximize product offerings yet minimize costly investments," said Chrysler President Tom LaSorda, adding that the agreement will allow Chrysler to add a small car in its lineup.

Nissan and Chrysler agreed to keep exploring other possible ways to share products, they said in a joint release. A Nissan affiliate has been supplying Chrysler with transmissions since 2004, it said.

"Nissan has a successful track record of win-win product exchanges, and we are pleased to be entering into this second agreement with Chrysler," said Carlos Tavares, Nissan Executive Vice President.

Chrysler, which makes the Jeep Wrangler and Dodge Charger, has been eager to expand international sales through tie-ups, partly to expand in emerging markets to offset declining U.S. sales.

Nissan has also flirted with the idea of a U.S. partner, to solidify its position in North America, but its talks with U.S. automaker General Motors Corp. in 2006 stalled.

Nissan Chief Executive Carlos Ghosn, who also heads Renault, has said the company is open to partnerships if they have potential to be successful like the Renault-Nissan alliance.

Nissan, Japan's No. 3 automaker, produces the March subcompact, Infiniti luxury models and GT-R sportscar. It turned itself around from near-bankruptcy under the 1999 alliance with Renault.

Chrysler, which had been losing money, became a private company in August after Cerberus Capital Management LP became the majority owner, buying an 80.1 percent stake from German automaker Daimler AG.

Last year, Chrysler announced a deal with China's biggest independent car company, Chery Automobile Co., to jointly produce and export small cars to Western Europe and the United States.